Novopan Industries Limited · 2012-12-13 · 4th Floor, Golden Green Apartment Erramanzil Colony, Somajiguda Hyderabad – 500 082 Bankers - Indian Overseas Bank Indian Bank IDBI

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Novopan Industries Limited

Dr. G V Krishna Reddy - ChairmanSmt G Indira Krishna Reddy - Vice ChairpersonSri S A Naqui - Executive DirectorSri A Issac George - DirectorSri M P Murti - DirectorSri Y Rama Murty - Director

Asst. Company Secretary - Mrs. Padma Loya

Auditors - Brahmayya & Co.,4th Floor, Golden Green ApartmentErramanzil Colony, SomajigudaHyderabad – 500 082

Bankers - Indian Overseas BankIndian BankIDBI Bank Ltd.Federal Bank Ltd.

Registered OfficeIDA, Phase - II, Patancheru,Medak District (AP) - 502 319.

CONTENTS

Notice 2Directors’ Report 5Management Discussion & Analysis 9Corporate Governance Report 11Auditor’s Report 20Balance Sheet 24Profit & Loss Account 25Cash Flow Statement 26Notes to Accounts 27

Page No.

Plant Locations1) IDA, Phase - II, Patancheru, Medak District (AP)

(Particle Board Plant)

2) Balanagar Village & Mandal, Mahaboobnagar Dist. (A.P.)(Particle Board Plant)

3) Plot No. A-2, IDA, Phase IV, Patancheru, Medak Dist. (AP)(Resin Plant)

BOARD OF DIRECTORS

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Notice is hereby given that the Twenty SeventhAnnual General Meeting of the Shareholders ofNOVOPAN INDUSTRIES LIMITED will be heldat Sri Sathya Sai Nigamagamam, 8-3-987/2,Srinagar Colony, Hyderabad – 500 073 on Monday,the 10th December, 2012 at 11.30 am to transactthe following business.

ORDINARY BUSINESS:

1. To receive, consider and adopt the AuditedProfit & Loss Account for the year ended 31st

March, 2012 and the Balance Sheet as on thatdate together with the Reports of Directors’ andAuditor’s for the year ended 31st March, 2012.

2. To appoint a Director in the place of Dr. G VKrishna Reddy, Director, who retires byrotation and being eligible, offers himself forreappointment.

3. To appoint a Director in the place of Mr. M PMurti, Director, who retires by rotation andbeing eligible, offers himself for reappointment.

4. To appoint M/s Brahmayya & Co., CharteredAccountants, Hyderabad as Statutory Auditorsto hold office from the conclusion of this AnnualGeneral Meeting up to the conclusion of thenext Annual General Meeting and authorize theBoard to fix their remuneration.

SPECIAL BUSINESS:

5. To consider and, if thought fit, to pass with orwithout modification(s), the following resolutionas a Special Resolution:

“RESOLVED THAT pursuant to Section163(1) and other applicable provisions, if any,

NOTICE OF THE 27TH ANNUAL GENERAL MEETINGof the Companies Act, 1956, the register ofmembers, index of members, the register andindex of debenture holders, if any, and copiesof all annual returns prepared under Section159 and 160 of the Companies Act, 1956,together with copies of certificates anddocuments required to be annexed theretounder Sections 160 and 161 of the CompaniesAct, 1956, be kept at the office of the Registrarand Transfer Agent of the Company viz., XLSoftech Systems Limited, No.3, Sagar Society,Road No.2, Banjara Hills, Hyderabad – 500034or at such other office of Registrar and TransferAgent as may be appointed by the Companyfrom time to time”.

By order of the BoardFor Novopan Industries Limited

Place : Hyderabad Padma LoyaDate : 10-11-2012 Asst. Company Secretary

Notes :

a) A member entitled to attend and vote at themeeting is entitled to appoint a proxy to attendand vote instead of himself and such proxyneed not be a member of the Company.

b) The instrument appointing the proxy in orderto be valid and effective shall be deposited atthe Registered Office of the Company not lessthan 48 hours before the commencement ofthe meeting.

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c) Members / Proxies should bring their duly filledin attendance slips sent herewith for attendingthe meeting.

d) Members who hold shares in dematerializedform are requested to bring their client ID andDP ID number to facilitate the identification oftheir attendance at the meeting.

e) Members whose shareholding is in electronicmode are requested to intimate any change ofaddress and updation of Bank Account detailsto their respective Depository Participants andwhose shareholding is in physical form tointimate such changes to M/s XL SoftechSystems Limited – Share Transfer Registrar ofthe company.

f) The Register of Members and Share TransferBooks of the Company will remain closed from07.12.2012 to 10.12.2012 (both daysinclusive).

g) Pursuant to Section 205A of the CompaniesAct, 1956, read with Investor Education and

Protection Fund (Awareness and Protection ofInvestors) Rules, 2001, Unclaimed dividendamount for the financial year 2004-05 has beentransferred to Investor Protection Fund. Themembers are requested to note that theunclaimed dividend amount pertaining to theyear 2005-06 is due for transfer to the said fundin the month of October, 2013 and thosemembers who have not yet encashed thedividend amount for that year are requested toclaim the same at the earliest.

h) Shareholders seeking any clarification /information on the Annual Accounts arerequested to forward his/her queries to thecompany at least 7 days prior to the meetingso that the required information can be madeavailable at the meeting.

i) Shareholders are requested to send allcommunications/clarifications/queries etc., atM/s XL Softech Systems Limited, No.3, SagarSociety, Road No.2, Banjara Hills, Hyderabad– 500034 the RTA of our Company.

IMPORTANT COMMUNICATION TO MEMBERSThe Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowingpaperless compliances by the Companies and has issued circular stating that service of notice/documentsetc., can be sent by e-mail to its members. To support this green initiative of the Government, memberswho have not registered their e-mail addresses, so far are requested to register their e-mail addresses, inrespect of electronic holdings with Depository through their concerned Depository Participants. Memberswho hold shares in physical form are requested to register their e-mail addresses with Company’s ShareTransfer Agent, M/s XL Softech Systems Limited, No.3, Sagar Society, Road No.2, Banjara Hills,Hyderabad – 500034.

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Explanatory Statement(Pursuant to Section 173(2) of the Companies Act, 1956)

Item No.5

As required under the provisions of section 163 of the Companies Act, 1956, certain documents such as theRegister of Members, Index of Members and certain other registers, certificates, documents etc., are requiredto be kept at the registered office of the Company. However, these documents can be kept at any other placewithin the city, town or village in which the registered office of the Company is situated, with the approval ofthe members to be accorded by a special resolution.

The shares transfer agents registered under the SEBI (Registrar to an Issue and Share Transfer Agent)Regulation, 1993, as amended, provides the depository related services for the shares held in dematerialisedform and also acts as the Share Transfer Agent for the shares held in the physical form. Hence, the approvalof the members is sought in terms of Section 163(1) of the Companies Act, 1956, for keeping theaforementioned registers and documents at the office(s) of the registrar and transfer agents (‘RTA’) as maybe appointed from time to time.

Currently, XL Softech Systems Limited, No.3, Sagar Society, Road No.2, Banjara Hills, Hyderabad – 500034are acting as the RTA for the Company.

In future, if there is a change in the RTA or its address, the Company shall communicate the same bypublishing a public notice in newspapers in which the quarterly financial results are generally published.

The Directors recommend the said resolution proposed to be passed as special resolution by the members.

None of the Directors is concerned or interested in the said resolution.

By order of the BoardFor Novopan Industries Limited

Place : Hyderabad Padma LoyaDate : 10-11-2012 Asst. Company Secretary

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DIRECTORS’ REPORT

Dear Shareholders,

Your Directors hereby present the Twenty SeventhAnnual Report and Audited Accounts of yourCompany, together with the Schedules and Notesthereon, for the Financial Year ended 31st March,

2012.

FINANCIAL RESULTS

* The above results are for 9 months vis a vis 15months for the previous year and hence notcomparable

PERFORMANCE

The Company’s revenue during the period wasRs.1.01 Crores for the financial year ended 31st

March, 2012 (comprising of 9 months) incomparison with Rs.53.62 Crores for the FinancialYear ended 30th June, 2011(comprising of 15months). Net loss for the year was Rs. 6.48 Crores,

Particulars2010-112011-12

Gross Revenue 1.01 58.34 Less: Excise Duty — 4.72Net Revenue 1.01 53.62Gross Operating Profit (Loss) (4.42) (7.73) Less: Interest 0.08 4.62Profit (Loss)Before Dep. & Tax (4.50) (12.35) Less: Depreciation 1.94 3.58Profit/(Loss)Before Extraordinary item (6.44) (15.93)Extraordinary Item - 7.08Profit/ (Loss) Before Tax (6.44) (23.01)Less:1) Deferred Tax 0.04 0.52

2) Prov for Taxes of earlier years - 0.02

Profit (Loss) After Tax (6.48) (23.55)

*(9months)

(15months)

(` in Crores)

as compared to net loss of Rs.23.55 crores incurredduring the previous year. As the operations of thecompany have been stopped at all itsmanufacturing units the revenues were generatedby selling stock in trade and other inventories.

FINANCIAL YEAR PERIOD

The Board of Directors of the company at itsmeeting held on 14th February, 2012 decided toclose the Financial Year 2011-12 on 31st March,2012. Accordingly, the said Financial Yearcomprises of 9 months from 1st July, 2011 to31st March, 2012.

OPERATIONS

The company has suspended its operations sinceFebruary, 2011 due to various reasons like shortageof major raw material, increased cost ofmanufacture coupled with continuous loadshedding and power shortage and competition inthe market. In this regard the company hasconstituted a committee to study & evaluate variousalternatives for revival of its operations and furnishits recommendations.

The said committee has taken into considerationvarious options and evaluated their impact on bothtechnical & financial feasibility. Based on theoutcome of such study the committeerecommended to the Board that under any of thescenario, continuing the business or reviving thesame would be unviable.

The committee also felt that further expansion orrevival may require locating the plant nearer to rawmaterial source and/or creating large capacitycontinuous automated plant, would require hugecapital investment and cause more financial burdenon the company.

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Accordingly, the committee has recommended thatthe management may consider disposing off theone or more undertaking(s) to such othermanufacturer or end user. In view of this thecompany has sought the approval of members todispose off one or more undertaking(s). Themembers of the company have accorded theirapproval through Postal Ballot with a majority of99.99%.

Currently the company is evaluating some of theoffers it has received for the sale of Plant &machinery at each of the three locations.

EXTENSION OF REDEMPTION DATE OFPREFERENCE SHARES

Your Company had issued 2,50,00,000 10% Non-Cumulative Redeemable Preference shares of Rs.10/- each (hereinafter referred to as ‘the preferenceshares’) on 11th June, 2011.

According to the terms of the issue, the preferenceshares were due for redemption on 10th June, 2012,however the Company had obtained the writtenconsent of GVK Projects & Technical ServicesLimited, Preference Shareholder, holding 100%Paid up Preference Share capital of the Company,in terms of the provisions of section 106 of theCompanies Act, 1956, for extending the due dateof redemption of the said shares by one year i.e.,from 10.06.2012 to 09.06.2013.

Your Company had duly complied with all thestatutory requirements of the regulatory authorities.

MANAGEMENT DISCUSSION, ANALYSIS &CORPORATE GOVERNANCE

Reports on Management Discussion & Analysis andstatus report on compliance of CorporateGovernance are annexed and form part of AnnualReport.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section217(2AA) of the Companies Act, 1956 on theDirectors’ Responsibility Statement, it is herebyconfirmed:

Ø that in the preparation of the annual accountsfor the financial year ended 31st March, 2012,the applicable accounting standards had beenfollowed along with proper explanation relatingto material departures;

Ø that the Directors had selected such accountingpolicies and applied them consistently andmade judgments and estimates that arereasonable and prudent so as to give a trueand fair view of the state of affairs of theCompany at the end of the financial year andof the profit or loss of the Company for thefinancial year ended 31st March, 2012;

Ø that the Directors took proper and sufficient careto maintain adequate accounting records inaccordance with the provisions of this Act forsafeguarding the assets of the Company andfor preventing and detecting fraud and otherirregularities

Ø During the year the company has suspendedmanufacturing activities at all its plants andtaken steps to dispose off one or moreundertaking of the company. Accordingly theannual accounts for the year ended 31st March,2012 were not prepared on a going concernbasis. Management has made necessarydisclosures in the notes to the financialstatements in this respect.

DIVIDEND

In view of the losses during the financial year 2011-12, no dividend is recommended by the Board ofDirectors.

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FIXED DEPOSITS

The Company has not accepted any Fixed Depositsduring the year under review as per the provisionsof Section 58A of the Companies Act, 1956 and therules made thereunder and no such amount inrespect of Fixed Deposit (Principal or Interest) wasoutstanding on the date of Balance Sheet.

DIRECTORS

In accordance with the provisions of the CompaniesAct, 1956 and the Articles of Association of theCompany, Dr. G V Krishna Reddy, Chairman andSri M P Murti, Director, will retire by rotation at theensuing Annual General Meeting and being eligibleoffer themselves for re-appointment.

None of the directors of the company aredisqualified for being appointed as directors asspecified in Section 274 of the Companies Act,1956. Your Board of Directors recommends theirappointment / re-appointment.

AUDITORS

M/s Brahmayya & Co., Chartered Accountants,Hyderabad, will retire at the ensuing AnnualGeneral Meeting and are eligible for re-appointmentas Statutory Auditors of the Company.

INDUSTRIAL RELATIONS

Your Company has been maintaining cordial andharmonious relations with employees. YourDirectors express their deep sense of appreciationfor the support and the contributions made byemployees.

PARTICULARS OF EMPLOYEES

During the period under review, there were no suchemployees whose particulars are required to begiven under the provisions of section 217(2A) ofthe Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 asamended.

CONSERVATION OF ENERGY,TECHNOLOGY & FOREIGN EXCHANGE

The particulars relating to Conservation of Energy,Technology Absorption, Foreign Exchange earningsand outgo as required under Section 217(1)(e) ofthe Companies Act, 1956 read with Companies(Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 is given in the Annexure –A and forms part of this report. It may be notedthat there was no expenditure on account oftechnology absorption during the year 2011-2012.

ACKNOWLEDGEMENTS

Your Directors would like to place on record theirgratitude for all the support received from theBanks, various departments of Central and StateGovernment, SEBI and Stock Exchanges. YourDirectors would also like to take this opportunityto express their sincere appreciation for theconfidence reposed by the valued shareholders inthe Company.

For and on behalf of the BoardFor Novopan Industries Limited

Place: Hyderabad Dr. G V Krishna ReddyDate : 10.11.2012 Chairman

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Annexure - AParticulars as required under Section 217(1)(e) of the Companies Act, 1956 relating to Conservation of Energy,Technology absorption, Foreign Exchange earnings and outgo.

Particulars Previous YearCurrent Year

A. Disclosure of Particulars with respect to Conservation

of Energy, Power and Fuel Consumption:

1 ELECTRICITY

a) Purchased Units (in Lacs) 2.74 87.60

Total Amount (Rs. in Lacs) 27.92 382.05

(including demand charges)

Rate / Unit (`) 10.18 4.36

b) Own Generation

i) Through Diesel Generator

No of Units in lacs - 0.16

Units / Litre of Diesel - 3.42

Cost / Unit (`) - 11.72

ii) Through Steam Turbine NIL NIL

2 COAL

Quantity (MT) NIL NIL

Total Cost (` in lacs) NIL NIL

Average Rate NIL NIL

3 OTHERS

Consumption per unit of Production

Electricity (Unit / Sq. Mtr.) - 6.06

Coal (Kgs./ Sq. Mtr.) NIL NIL

B. Disclosure of particulars to foreign exchange

earnings and outgo: (Rs.in lacs)

Foreign Exchange outgo during the current accounting period 407.07 1930.44

Foreign Exchange Earnings NIL NIL

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MACRO ECONOMIC OVERVIEW:

The world economy continues to face challenges.Advanced Economies that seemed to be shapingwell at the start of 2011 lost steam towards the fag-end of the year and this uncertainty is clouding theprospects for global growth during 2012. The growthmomentum was impacted as the protracted debtcrisis in the euro area and fiscal fragilities dampenedbusiness and consumer confidence.

INDUSTRY STRUCTURE, DEVELOPMENTSIN INDIA

There has been a drop in the growth of Indianeconomy from 8.4% in the year 2010-11 to 6.9%in the year 2011-12. The total furniture industry inIndia although valued at Rs.71,000crores, yet theorganised sector comprises of just 15% and theunorganised players accounting for the rest. Thusthe Indian furniture manufacturing industry isexpected to grow at a slow pace of 3 to 4 % perannuam. Moreover, based on the present trend inthe real estate market wherein, large inventories arebuilt in both residential and commercial properties,it needs to be seen how it will impact the furniturebusiness.

OPERATIONS

The company has suspended its operations sinceFebruary, 2011 due to various reasons like shortageof major raw material, increased cost of manufacturecoupled with continuous load shedding and powershortages on one hand and competition in themarket on the other hand. In this regard the companyhas constituted a committee to study & evaluatevarious alternatives for revival of its operations andfurnish its recommendations.

MANAGEMENT DISCUSSION & ANALYSISBefore submitting its report to Board of Directorsthe committee has deliberated on the variousalternatives like;

1. Stopping PPB Line and utilise imported boardsfor lamination :

2. Up-gradation of the existing plants at the samelocation

3. Operating only Shadnagar Plant with additionalShort Cycle Press and upgradation of theShadnagar Plant

4. Shifting the existing plants close to the sourceof wood

5. Setting up a new higher capacity plant andreplacing of existing machinery which mayrequire huge financial commitments.

For each of the above alternates the committee hasgone into technical as well as financial feasibilitybased on various factors such as availability of woodand power supply, cost of production andcompetitive environment prevailing in the marketand recommended to the Board that under any ofthe scenario, continuing the business or reviving thesame would be unviable.

Accordingly, the committee has recommended thatthe management may consider disposing off the oneor more undertaking(s) to such other manufactureror end user. In view of this the company has soughtapproval of the members to dispose off one or moreundertaking(s). The members of the company haveaccorded their approval through Postal Ballot witha majority of 99.99%.

Currently the company is evaluating some of theoffers it has received for the sale of Plant & machineryat each of the three locations.

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PERFORMANCE

Net turnover of your company for the financial yearended 31st March, 2012(comprising of 9 months)was at Rs.1.01 Crores in comparison with Rs. 53.62Crores for the Financial Year ended 30th June, 2011(comprising of 15 months). Net loss for the year Rs.6.48 Crores, as compared to net loss of Rs.23.55crores incurred during the previous year.

OUTLOOK

The Company is looking out for various options inaddition to pursuing new line of business andconsidering such other appropriate steps as may beconsidered necessary and suitable to diversify thebusiness of the Company.

RISKS & CONCERNS

As the manufacturing activities at all the three plantshad been closed, the plant, machinery and otherequipments are lying idle, which is a major concernfor the Company.

INTERNAL CONTROL SYSTEM

Your Company has reviewed internal controls andits effectiveness through the internal audit process.

The Audit Committee of the Board oversees theadequacy of the internal control environmentthrough regular reviews of the audit findings andmonitoring implementations of internal auditrecommendations through the compliance reportssubmitted to them.

HUMAN RESOURCES

During the period most of employees have left theservices as the operations of the company werestopped at all the three units. The management afterdue negotiation with the Recognized Union, notifieda Voluntary Retirement Scheme (VRS). Thecompany has settled all the eligible employees whohave applied for the VRS.

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CORPORATE GOVERNANCENovopan has been regularly implementing the best practices of Corporate Governance to ensure theattainment of total transparency, accountability and integrity. The objective extends, not merely to meetwith statutory requirements but also to go beyond them by putting into place procedures and systems,which are in accordance with best practices for governance. Corporate Governance at Novopan Industriesmeans being responsive to aspiration of all the shareholders, employees, government, general trade and thepublic. Towards emphasizing on these guiding principles, the company, through formalized meetings andcommittees consisting of senior managers and staff, reviews periodically various activities of the company.The compliance report of the company, in accordance with the Stock Exchange Regulations and ListingAgreement is presented below:

1. Board of Directors

The Company’s policy is to maintain optimum combination of Executive and Non-Executive Directors.The composition of the Board and category of Directors as on 31st March, 2012 is given below:

Promoter & Non – Executive Directors 1 Dr G V Krishna Reddy – Chairman2 Smt G Indira Krishna Reddy – Vice Chairperson

Whole Time Director or Executive 1 Sri S A Naqui - Executive DirectorDirector

Independent Directors 1 Sri M P Murti - Director2 Sri A Issac George - Director3 Sri Y Rama Murty – Director

Category Particulars of Directors

2. Non – Executive Director’s Remuneration & Sitting Fees

The non-executive Directors did not draw any remuneration from the company except sitting fees ofRs.4,000/- for attending each Board Meeting / Committee Meeting. The Company has paid totalRs.52,000/- sitting fee to directors during the financial year 2011-12.

3. Board Meetings held in the financial year 2011-12

The Board of Directors of the Company has decided to close the current Financial Year 2011-12 on31st March, 2012. Accordingly, the Financial Year was comprising of nine months i.e., from 1st July,2011 to 31st March, 2012. In the said 9 months period, the Board of Directors of the company hadmet four times (as against minimum requirement of four meetings in each financial year which consistsof 12 months) on 2nd August, 2011, 31st October, 2011, 14th February, 2012 & 25th February, 2012.The gap between two Board Meetings was within the maximum time gap of four months prescribed inClause 49 of the Listing Agreement.

4. Attendance of Board of Directors

The following is the attendance of each Director at the Board Meeting, last Annual General Meetingand number of other Directorship and Chairman/Membership of Committees of each Director in variousother Companies.

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# Committee memberships considered are of other companies only and those as required under thecode of Corporate Governance.

* Directorships in other public limited companies.** Sri S P Bhasin has resigned from the office of Director (Operations) & Director on 17th July, 2011

5. Code of Conduct

The Company has received declarations from its Directors and Senior Management Personnel affirmingtheir compliance with the applicable code of conduct.

6. Audit committee

The role / terms of reference of the Audit Committee include the following:

l Reviewing the Company’s financial reporting process and disclosure of its financial information toensure that the financial statements are correct, sufficient and credible;

l Reviewing with the Management the Annual Financial Statements before submission to the Board;

l Reviewing with the Management, Statutory and Internal Auditors the adequacy of Internal ControlSystems;

l Discussion with Internal Auditors on any significant findings and follow-up thereon;

l Review the Company’s accounting and risk management policies;

l Looking into the reasons for substantial defaults in the payment, if any, to depositors, shareholders (incase of non-payment of declared dividends) and creditors;

l Recommend the appointment and removal of Statutory Auditors and fixation of Audit Fees and approvalfor payment for any other services.

Name of theDirector

Category

AttendanceParticulars

Number of otherDirectorships and Committee

Member/Chairmanships #

BoardMeeting

Last AGMOther

Director-ships*

CommitteeMember-

ships

CommitteeChairman-

ships

Dr G V Krishna Reddy Promoter; 4 Yes 11 Nil NilNon-executive

G Indira Krishna Reddy Promoter; 4 Yes 10 Nil NilNon- executive

S A Naqui Whole time Director 4 Yes Nil Nil NilM P Murti Independent 4 Yes 3 1 2A Issac George Independent 2 Yes 5 3 NilY Rama Murty Independent 3 Yes 2 Nil NilS P Bhasin ** Whole time Director 1 No Nil Nil Nil

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Name of Directorand Position

Category ofDirector

Meetings / Attendance

M P Murti – Chairman Independent P P P

A Issac George – Member Independent P A P

Y Rama Murty – Member Independent P P A

G Indira K Reddy - Member Non-Executive P P P

02.08.11 31.10.11

P – Present, A – Absent

8. Remuneration Committee

The Remuneration Committee of the company comprises of four Non-executive Directors viz., Sri M PMurti as Chairman (Independent Director), Smt G Indira Krishna Reddy (Non-executive Director) SriA Issac George (Independent Director) and Sri Y Rama Murty (Independent Director) as its members.

Details of Remuneration paid to the Whole time Directors for the year : The aggregate valueof salary and perquisites paid for the year ended 31st March, 2012 to Sri S A Naqui, ExecutiveDirector (from the date of appointment i.e., 2nd August, 2011 to 31st March, 2012) was Rs.11.15 lacs.There is a Sub Committee of Board viz., Remuneration Committee which studies the remunerationpolicy and fixes the remuneration of non-executive and executive directors. The Company has onewhole time director i.e. Executive Director and his salary have been fixed by the shareholders at theAnnual General Meeting. The non-executive directors do not draw any remuneration from the companyexcept sitting fees.

9. Disclosures by management to the Board

All details relating to financial and commercial transactions where Directors may have a pecuniaryinterest are provided to the Board, and the interested Directors neither participate in the discussion,nor do they vote on such matters.

10. Shareholders’ / Investors’ Grievance Committee

In terms of Clause 49 of the Listing Agreement with the Stock Exchanges, the Board of Directors of theCompany has constituted an Investor Grievance Committee comprising of four Non-executive Directorsviz., Sri M P Murti as Chairman (Independent Director), Sri A Issac George (Independent Director), SriY Rama Murty (Independent Director) & Smt G Indira Krishna Reddy (Non-executive Director) as itsmembers.

The Investor Grievance Committee specifically looked into the redressal of Investor grievances pertainingto - Transfer of Shares, Payment of Dividend, Dematerialization of Shares and issue of Duplicateshares Certificates etc.,

14.02.12

The Composition of Audit Committee and Attendance of members are given as under :

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Particulars

Transmission of Shares Nil 3 3 Nil

Deletion of Name Nil 3 3 Nil

Change of Address Nil 19 19 Nil

Non Receipt of Dividends Nil 2 2 Nil

Unclaimed Dividends Nil 1 1 Nil

Non Receipt of Share Certificates Nil 5 5 Nil

Complaints from Stock Exchanges, SEBI, ROC

& Ministry of Corporate Affairs Nil 4 4 Nil

Indemnity for duplicate share certificates Nil 2 2 Nil

Miscellaneous Nil 4 4 Nil

Non receipt of Annual Reports Nil 2 2 Nil

Loss of Share Certificates Nil 4 4 Nil

Splitting of Share Certificates Nil 1 1 Nil

Exchange of Share Certificates & Letters of Exchange Nil 5 5 Nil

Old Defunct Share Certificates Nil 6 6 Nil

Unclaimed Share Certificates Nil 1 1 Nil

Pending atthe beginingof the year

Receivedduring

the year

Addressedduring the

year

Pending ason 31st

March, 2012

The Company has attended to most of the investors’ grievance / complaints within a period of 10 days fromthe date of receipt of the same.

11. CEO/CFO Certification:

A certificate from Executive Director and Finance Head on the financial statements of the companywas placed before the Board.

12. General Body Meetings:

Location and time for the last three Annual General Meetings were:

Year

2008 - 2009 Sathya Sai Nigamagamam, 8-3-987/2,Srinagar Colony, Hyderabad – 500073 22-09-2009 3.30 p.m.

2009 -2010 Sathya Sai Nigamagamam, 8-3-987/2,Srinagar Colony, Hyderabad – 500073 27-11-2010 11.30 a.m.

2010 -2011 Sathya Sai Nigamagamam, 8-3-987/2,Srinagar Colony, Hyderabad – 500073 28-11-2011 11.30 a.m.

Location Date Time

The total number of queries / correspondence received and resolved to the satisfaction of the shareholdersduring the year under review is given below.

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Postal Ballots: In terms of the Provisions of Section 192A of the Companies Act, 1956 read with Companies(Passing of the Resolutions by Postal Ballot) Rules, 2001, the company during the financial year ended 31st

March, 2012 (i.e., 9 month period from 1st July, 2011 to 31st March, 2012) has passed the followingOrdinary Resolution by Postal Ballot.

1) Ordinary resolution under section 293(1)(a) to sell or lease or otherwise dispose off or transfer the partor substantially the whole of one or more undertaking(s) of the company located at Patancheru andShadnagar. The resolution was passed with a majority of 99.99%.

The proceedings of Postal Ballot were conducted by Mr. P. S. Rao, Partner, P.S. Rao & Associates, CompanySecretaries as scrutinizers.

There is no Special or Ordinary Resolutions proposed, which needs to be passed by way of Postal Ballot atthe ensuring Annual General Meeting.

13. Other Disclosures

u Related party transactions: There were no materially significant related party transactions, whichhad potential conflict with the interests of the Company at large. Transactions with the relatedparties are disclosed in Notes to the Accounts in the Annual Report.

u There were no instances of non-compliance, penalties and strictures imposed on the Company bythe Stock Exchanges or SEBI or any statutory authority on any matter relating to capital marketsduring the last three years.

14. Means of Communication

The quarterly financial results are generally published in “Financial Chronicle” & and “Andhra Bhoomi”and the same is being intimated to Stock Exchanges where the shares of the company is listed.

15. Share Transfer System

The Board of Directors has appointed XL Softech Systems Limited as Share Transfer Registrars, foraffecting the transfers and other related works of the company. The transfers, which are received inphysical form are registered and returned within a period of one month from the date of receipt, if thedocuments are valid and complete in all respects. The transfer of share in physical form is affected onfortnightly basis by the Share Transfer Registrar and the transfer of shares in electronic form is affectedthrough the Depository Participant.

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17. Dematerialization of Shares

The equity shares of the Company are being traded compulsorily in dematerialized form and as on 31st

March, 2012 total number of 1,15,29,552 equity shares of the face value of Rs.11.53 crores, representing96.80% of the equity share capital have been dematerialized.

Monthly High / Low of market price of the Company’s shares traded on The Bombay Stock ExchangeLimited (BSE) and National Stock Exchange of India Limited (NSE) during the Financial Year 2011-12 (i.e., 9 months period from 1st July, 2011 to 31st March, 2012).

Category(No. of shares)

0 – 1000 12786 98.75 939259 7.891001 – 5000 121 0.93 243532 2.04

5001 – 10000 13 0.10 91367 0.77 Above 10000 28 0.22 10635795 89.30

Total 12948 100.00 11909953 100.00

Number ofShareholders

Number ofShares held

% ofShareholding

% ofShareholders

Market Capitalization : ` 33.35 crores as on 31st March, 2012.

16. Distribution of Shareholding as on 31st March, 2012

Particulars

July, 2011 46.30 40.10 43.00 40.55

August, 2011 43.95 40.10 46.00 38.35

September, 2011 44.90 38.70 45.00 36.30

October, 2011 45.80 39.75 48.00 38.50

November, 2011 42.00 34.50 48.30 35.00

December, 2011 39.25 29.70 39.80 28.50

January, 2012 37.85 28.05 36.40 29.00

February, 2012 32.95 29.35 33.60 29.00

March, 2012 33.55 26.40 31.50 25.25

BSE NSE

High Low High Low

(In Rs.)

17


1. Annual General Meeting 10th December, 2012 at 11.30 am.Date, Time & Venue “Sathya Sai Nigamagamam”, 8-3-987/2,

Srinagar Colony, Hyderabad – 500 073.

2. Financial Calendar 2012-2013 Reporting of financial results for each quarter is done within 45days of relevant quarters & for the financial year ending 31st

March, 2013 will be done during May, 2013.

3. Dates of Book Closure From 7th December, 2012 to 10th December, 2012 (both daysinclusive)

4. Listing on Stock Exchanges Bombay Stock Exchange Ltd. (BSE)Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001

The National Stock Exchange of India Ltd. (NSE)Bandra Kurla Complex, NSE Exchange Plaza Bandra (East),Mumbai – 400 051

5. Listing Fees Paid to both the above Stock Exchanges upto Financial Year2012-13.

6. Stock Code ‘500310’ on the Bombay Stock Exchange Ltd., Mumbai‘NOVOPAN IND’ on the National Stock Exchange of India Ltd,Mumbai.

7. Demat ISIN Number in NSDL & INE460B01016CDSL for equity shares

8. Registered Office IDA, Phase - II, Patancheru,Medak District (AP) - 502 319.Phone : 08455 - 242624Fax : 08455 - 241883E-mail : [email protected]

9. Share Transfer Registrars XL Softech Systems Limited(for both Physical & No.3, Sagar Society, Road No.2, Banjara Hills,Electronic) Hyderabad – 500034

Phone : 040-23545913/14/15 Fax No.040-23553214Email ID : [email protected]

10. Shareholders’ Correspondence Share Transfers in physical form and all other correspondenceregarding Duplicate Share Certificates, Dividends, Change ofAddresses shall be addressed to M/s XL Softech SystemsLimited. – Share Transfer Registrar.

18. Shareholders information :

18


Annexure to Report of Corporate GovernanceDetails of Director seeking reappointment at the ensuing Annual General Meeting of the Company (Pursuantto Clause 49 of the Listing Agreement with Stock Exchanges).

Name of the Director

Date of Birth

Date of Appointment

Sahres held

Qualification

Dr. G V Krishna Reddy

22nd March, 1937

31st August, 1984

100

Bachelor’s degree and completed the Owner /President Management Program from HarvardBusiness School

Mr. M P Murti

1st December, 1919

25th May, 1986

606

B.A. M.Sc. & MS in ChemicalEngineering from Case WesternUniversity, USA.

1. GVK Power & Infrastructure Limited2. Alaknanda Hydro Power Company Limited3. GVK Energy Limited4. GVK Projects & Technical Services Limited5. Pinakini Share & Stock Brokers Limited6. Taj GVK Hotels & Resorts Limited7. GVK Industries Limited8. GVK Goutami Power Limited9. GVK Power (Goindwal Sahib) Limited10. GVK Oil & Gas Limited11. Bangalore International Airport Limited.

List of PublicCompanies in whichoutside directorshipsheld as on31.03.2012

Experience inspecific functionalarea

1. SreeRayalaseemaAlkalies & AlliedChemicals Limited

2. Reliance Cellulose Products Limited3. CIL Securities Limited

He has over 47 years of industrialexperience in various capacities bothin India & abroad. He has vast andglobal exposure to management andHuman Resource Developmenttraining and development activities,particularly in developing strategies,production & marketing and financefunctions in all their respective modernaspects. After a distinguished career,he retired as the Managing Director ofUnion Carbide Eastern Operationsand Union Carbide Ceylon. Inaddition to that he has also been arecipient of a number of prestigiousawards.

Dr. Reddy holds a Bachelor’s degree and hascompleted the Owner / President ManagementProgram from Harvard Business School. He has alsobeen awarded a Doctorate in Philosophy from theJawarhalal Nehru Technological University. He is afirst generation industrialist and the founder of theGVK Group which has businesses in the energy,urban infrastructure, transportation, particle boards,hospitality, petrochemicals, bio-technology andfinance sectors. His career spanning the last 42 yearsstarted with his involvement in the construction ofmajor infrastructure projects for the Government suchas dams, power houses, irrigation canals, bridges,roads, aqueducts and undertunnels. He establishedNovopan Industries Limited, one of India’s first highquality pre-laminated particle board facility in 1979,followed by GVK Petrochemicals Limited for themanufacture of thermo-setting polymers to meet therequirements of the particle board industry, and GVKAmerica Inc. in North Carolina, USA.The hospitality business of the GVK group ofcompanies which was initiated as a strategic allianceforged by him with the TajGroup, comprises of TajKrishna, Taj Deccan, TajBanjara and Taj Chandigarh.He also pioneered the establishment of the 217 MWJegurupadu combined cycle power plant, India’s firstindependent power producer and the Jaipur-Kishangarh BOT road project, a segment of theGolden Quadrilateral National HighwaysDevelopment Project of the GoI.

19


Auditors’ Certificate on Compliance of conditions of the Corporate Governance as per clause49 of the Listing Agreement with the Stock Exchanges.

To

The Members ofNovopan Industries Limited

We have examined the compliance of conditions of Corporate Governance by Novopan Industries Limited,Hyderabad for the year ended on 31st March, 2012, as stipulated in Clause 49 of the Listing Agreement ofthe said Company with Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the management. Ourexamination has been limited to a review of the procedures and implementations thereof adopted by thecompany for ensuring compliance with the conditions of the certificate of Corporate Governance as stipulatedin the said Clause. It is neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanations given to us andrepresentations made by the Directors and management;

We certify that the company has complied with the conditions of Corporate Governance as stipulated inClause 49 of the above mentioned Listing Agreement.

We state that no Investor grievances are pending for a period exceeding one month against the Company,as per the records maintained by the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company norof the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For BRAHMAYYA & CO.,Chartered Accountants.

(KOTESWARA RAO SSR)Place : Hyderabad PartnerDate : 30th May, 2012 Membership No.18952

20


Auditor’s Report

To, The Members ofNOVOPAN INDUSTRIES LIMITED,PATANCHERU(A.P).

We have audited the attached balance sheet ofNOVOPAN INDUSTRIES LIMITED, PATANCHERU(A.P), as at 31st March, 2012, its statment of Profitand Loss for the period ended on that date annexedthereto, and its Cash Flow statement for the periodended on that date. These financial statements arethe responsibility of the company’s management.Our responsibility is to express an opinion on thesefinancial statements based on our audit.

We conducted our audit in accordance with theauditing standards generally accepted in India.Those Standards require that we plan and performthe audit to obtain reasonable assurance aboutwhether the financial statements are free of materialmisstatement. An audit includes examining, on atest basis, evidence supporting the amounts anddisclosures in the financial statements. An audit alsoincludes assessing the accounting principles used andsignificant estimates made by management, as wellas evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

As required by the Companies (Auditor’s Report)Order, 2003 issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 ofthe Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referredto above, we report that:

(i) We have obtained all the information andexplanations which, to the best of ourknowledge and belief were necessary for thepurposes of our audit;

(ii) In our opinion, proper books of account asrequired by law have been kept by the companyso far as appears from our examination of thosebooks;

(iii) The Balance Sheet, the statement of Profit andLoss and the Cash-flow Statement dealt withby this report are in agreement with the booksof account;

(iv) In our opinion, the Balance Sheet, the Profitand Loss and the Cash- flow Statement dealtwith by this report comply with the accountingstandards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956;

(v) On the basis of written representations receivedfrom the directors, as on 31st March, 2012, andtaken on record by the Board of Directors, wereport that none of the directors is disqualifiedas on 31st March, 2012 from being appointedas a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of ourinformation and according to the explanationsgiven us, without qualifying our opinion, wedraw attention to Note No.27 to the financialstatements, regarding the going concern statusof the company in view of stopping themanufacturing activity, declaring voluntaryretirement to its employees and invitingtenders for disposal of plant and machinery,the said accounts give the informationrequired by the companies Act, 1956, in themanner so required and give a true and fairview in conformity with the accountingprinciples generally accepted in India, in thecase of ;

(a) the Balance Sheet, of the state of affairsof the company as at 31st March, 2012;

(b) the statement of the Profit and Loss, ofthe LOSS of the company for the periodended on that date; and

(c) the Cash-flow Statement, of the cash flowsof the company for the year ended on thatdate.

For BRAHMAYYA & CO., Chartered Accountants.

Firm Regn No.:000513S

(KOTESWARA RAO SSR) Partner

Membership No:018952Place : HyderabadDate : 30th May, 2012

21


1.1 The Company has maintained proper records showing full particulars including quantitative detailsand situation of fixed assets.

1.1.1 As explained to us, the management has physically verified most of the fixed assets during theyear and there is a regular programme of verification which, in our opinion, is reasonable havingregard to the size of the company and the nature of the assets. No material discrepancies werenoticed on such verification.

1.1.2 During the year the assets disposed off by the company are not material. Attention invited to NoteNo. 27 of notes to accounts.

2.1 The company has physically verified its inventories during the year. In our opinion, the frequencyof verification is reasonable.

2.2. In our opinion, the procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of its business.

2.3. The company is maintaining proper records of inventory and the discrepancies noticed onverification between the physical stocks and the book records were not material and have beenproperly dealt with in the books of account.

3.1.1 According to the information furnished to us, the company has not granted any loans, secured orunsecured to companies, firms or other parties covered by the register maintained under Section301 of the Companies Act 1956. Accordingly the provisions of clauses 4(iii) (b), (c) and (d) of theorder, are not applicable.

3.1.2 According to the information and explanations furnished to us, the company has not taken anyloans secured or unsecured from companies, firms or other parties whose particulars are recordedin the register maintained under Section 301 of the Companies Act 1956. Accordingly the provisionsof clauses 4(iii) (f) and (g) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequateinternal control systems commensurate with the size of the company and the nature of its businesswith regard to purchases of inventory, fixed assets and with regard to the sale of goods andservices. Further during the course of our audit, we have not come across any instances of majorweaknesses in internal control that in our opinion, require correction but have so continued withoutcorrection.

5.1 Based on the information and explanations given to us, we are of the opinion that the transactionsthat need to be entered in the register maintained under section 301 of the Companies Act, 1956have been so entered.

5.2 In our opinion and according to the information and explanations given to us, the transactionsmade in pursuance of such contracts or arrangements have been made at prices which are havingregard to the prevailing market prices at the relevant time.

ANNEXURE

Re: NOVOPAN INDUSTRIES LIMITED - HYDERABAD (A.P)

22


6. The company has not accepted deposits from public. Hence the provisions of Section 58A, 58AAand other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance ofDeposits) Rules, 1975 are not applicable to the company.

7. In our opinion, the company has an internal audit system commensurate with the size and natureof its business.

8. We have broadly reviewed the books of account relating to materials, labour and other items ofcost maintained by the company pursuant to the Rules made by the Central Government forthe maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and weare of the opinion that prima facie the prescribed accounts and records have been made andmaintained.

9.1 According to the records of the company, the company is regular in depositing with appropriateauthorities, the undisputed statutory dues including Provident Fund, Employees’ State Insurance,Income Tax, Wealth Tax, Service tax, Cess and other material statutory dues applicable to it.

9.2 According to the information furnished to us, there were no undisputed statutory dues payable inrespect of Income Tax, Wealth Tax, Service tax and Cess which were in arrears, as at the date ofthe Balance Sheet under report, for a period of more than six months from the date they becamepayable.

9.3 According to the records of the company and the information and explanations given to us, thereare no dues in respect of Sales Tax , Income Tax, Excise Duty, Customs duty, Wealth Tax, Servicetax, and Cess, which have not been deposited on account of any dispute except the following:

Nature ofthe Dues

Amount(Rs. in Lacs)

Period for which theAmount Relates (Asst. year)

IncomeTax

20.37

36.49

49.64

180.23

2003 - 2004

2004 - 2005

2006 - 2007

2007 - 2008

Income Tax Appellate TribunalHyderabad

10. The accumulated losses at the end of the financial year are more than fifty percent of its net worth.The company has incurred cash losses during the financial year and also in the immediatelypreceding financial year.

11. The company has not defaulted in repayment of its dues to financial institutions and banks.

12. The company has not granted any loans or advances on the basis of security by way of pledge ofshares, debentures and other securities.

13. The company is neither a chit fund nor a nidhi/mutual benefit fund /society and hence therequirements of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicableto the company.

Forum in which the dispute is pending

-DO-

-DO-

-DO-

23


14. The company is not dealing in or trading in shares, securities, debentures and other investments.Accordingly, the requirements of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003are not applicable to the company.

15. According to the information furnished to us, the company has not given any guarantees for loanstaken by others from any banks or financial institutions.

16. According to the information and explanations given to us, no term loans were obtained by thecompany during the year.

17. According to the information and explanations given to us, and on an overall examination of thebalance sheet of the company, we report that no funds were raised on short-term basis.

18. During the year the company has not made preferential allotment of shares to parties coveredin the register maintained under section 301 of the Companies Act, 1956.

19. During the year the company has not issued any debentures.

20. During the year the company has not raised any money through public issue. Accordingly, theprovisions of clause 4(xx) of the Companies (Auditor’s Report) Order, 2003 are not applicable tothe company.

21. According to the information and explanations given to us, and based on the audit proceduresgenerally adopted by us, we report that, during the year, no fraud on or by the company has beennoticed or reported that is either significant or could have caused a material misstatement in thefinancial statements.

For BRAHMAYYA & CO., Chartered Accountants.

Firm Regn No.:000513S

2(KOTESWARA RAO SSR)Place : Hyderabad PartnerDate : 30th May, 2012 Membership No:018952

24


BALANCE SHEET AS AT 31ST MARCH, 2012

NoteNo.

As at 31st March, 2012Amount

Àmount

`

As at 30th JUNE, 2011Amount

Àmount

Èquity and Liabilities(1) Shareholders’ funds

(a) Share capital 3 36,90,99,530 36,90,99,530(b) Reserves and surplus 4 9,10,748 6,57,55,010

37,00,10,278 43,48,54,540(2) Current liabilities

(a) Trade payables 5 3,84,16,844 11,67,24,464(b) Other current liabilities 6 41,36,46,012 34,27,92,433(c) Short-term provisions 7 42,855 2,74,87,438

45,21,05,711 48,70,04,335Total 82,21,15,989 92,18,58,875

Assets(1) Non-current assets

(a) Fixed assets 8(i) Tangible assets 56,45,91,715 60,34,76,099(ii) Intangible assets - -(iii) Capital work-in-progress 3,22,250 3,22,250

56,49,13,965 60,37,98,349(b) Non-current investments 9 5,37,500 5,37,500(e) Other non-current assets 10 81,42,459 95,42,757

57,35,93,924 61,38,78,606(2) Current assets

(a) Inventories 11 20,36,41,455 22,52,43,454(b) Trade receivables 12 60,78,435 1,77,21,869(c) Cash and cash equivalents 13 90,32,345 1,55,86,980(d) Short-term loans and advances 14 2,77,23,368 3,11,03,590(e) Other current assets 15 20,46,462 1,83,24,376

24,85,22,065 30,79,80,269Total 82,21,15,989 92,18,58,875

Notes to accounts form an integral part of the Balance sheetAs per our report of even date For and on behalf of the Board of Directorsfor BRAHMAYYA & CO.Chartered AccountantsFirm Regn No. : 000513S

Mrs. Padma LoyaAsst. Company Secretary

Place : HyderabadDate : 30-05-2012

Dr. G V KRISHNA REDDYChairman

S A NAQUIExecutive Director

(KOTESWARA RAO SSR)PartnerMembership No.: 18952

Particulars

25


STATEMENT OF PROFIT AND LOSS FOR THE PERIOD ENDED 31ST MARCH,2012

NoteNo.

Current Year`

Previous Year`

Continuing OperationsRevenue from operations (gross) 16 9,91,914 55,29,13,889Less: Excise duty 79,692 4,72,01,460Revenue from operations (net) 9,12,222 50,57,12,429Other income 17 91,79,677 3,04,56,372

Total Revenue 1,00,91,899 53,61,68,801

Expenses(1) Cost of materials consumed - 26,44,84,415(2) Changes in inventories of finished

goods work-in-progress and Stock-in-Trade 4,779 1,05,68,437(3) Employee benefits 18 26,78,946 13,15,74,407(4) Finance costs 19 7,53,213 5,05,63,970(5) Depreciation and amortization expense 8 1,93,93,356 3,58,71,988(6) Other expenses 20 5,17,45,472 20,23,93,062

Total expenses 7,45,75,766 69,54,56,279

Profit / (Loss) before exceptional and extraordinary items and tax (6,44,83,867) (15,92,87,477)Exceptional itemsProfit / (Loss) before extraordinary items and tax (6,44,83,867) (15,92,87,477)Extraordinary Items - 7,08,03,346Profit / (Loss) before tax (6,44,83,867) (23,00,90,823)Tax expense:(1) Current tax(2) Earlier Years (3,60,395) (2,35,799)(3) Deferred tax - (52,24,797)Profit / (Loss) (after tax) for the year from continuing operations (6,48,44,262) (23,55,51,419)Earnings per equity share(1) Basic 21 (5.44) (19.78)(2) Diluted

Notes to Accounts form an integral part of the statement of Profit and LossAs per our report of even date For and on behalf of the Board of Directorsfor BRAHMAYYA & CO.Chartered AccountantsFirm Regn No. : 000513S






Particulars

26


CASH FLOW STATMENT FOR THE YEAR 2011-12

AmountAdd /(Deduct)

AmountAdd /(Deduct)

Current Year Previous Year

A. Cash flow from operating activitiesNet Loss before tax & Extra-ordinary items (6,44,83,867) (15,92,87,475)Adjustments for:Depreciation 1,93,93,356 3,58,71,988Miscellaneous Expenditure written off 3,74,145 4,92,305Interest 6,36,658 4,61,88,909Interest & others received (4,78,690) (12,94,921)Credit Balance and Excess Provision credited back (75,03,061) (45,60,791)Loss / (Profit) on sale of Assets (6,40,000) 777Loss / (Profit) on sale of Assets - (1,05,35,096)Loss / (Profit) on sale of Investments - 10,39,500Provision for Doubtful Debts 8,70,920 20,47,267Bad Debts written off - 3,59,415Claims Written off 1,49,81,607 1,14,668Foreign Exchange Fluctuation 10,95,737 (16,60,636)Loss / (Profit) on sale of Raw Materials 34,858 63,90,253Loss / (Profit) on sale of Raw Materials - (65,80,769)Raw Materials writtern off 6,83,232 1,00,49,299Impairment loss on fixed assets 2,09,37,935 -Debit balances written off 31,65,879 -

5,35,52,576 7,79,22,168Operating Profit before working capital changes (1,09,31,291) (8,13,65,307)Voluntary Retirement Compensation - (7,08,03,346)Operating Loss after extrordinary items (1,09,31,291) (15,21,68,653)Adjustments for:Trade & Other Receivables 1,32,59,014 10,07,55,669Inventories (2,13,186) (4,84,79,086)Proceeds from sale of Raw Materials 2,10,97,095 3,89,54,130Trade & Other Payables (2,71,13,141) 70,29,782 18,87,42,932 27,99,73,645Cash generation from Operations (39,01,509) 12,78,04,992Less: Income Tax Paid (57,212) 1,09,24,252

(39,58,721) 11,68,80,740B. Cash flow from Investing activities

Interest & others received 2,25,810 7,87,894Proceeds from Sale of Investments - 1,15,500Proceeds from Sale of Assets 7,30,000 1,69,89,354Foreign Exchange Loss (10,95,737)Purchase of Fixed Assets (15,36,907) (16,76,834) (1,42,800) 1,77,49,948

C. Cash flow from financing activitiesNet Borrowings - (32,74,86,963)Increase in Share Capital 25,00,00,000Interest paid (6,36,658) (4,79,78,231)Dividends paid (2,82,422) (919,080) (2,74,947) (12,57,40,141)Net increase in cash & cash equivalents (65,54,635) 88,90,547Cash & cash equivalents at the beginning of the year 1,55,86,980 66,97,433Cash & cash equivalents at the end of the year 90,32,345 1,55,87,980

For and on behalf of the Board of Directors

(`)





27


NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 20121. General Information

Novopan Industries Limited (“the company”) is engaged in the business of production and sale ofPlain & Melamine Faced Particle Boards. The company’s production activities are located at theirPlants in IDA, Phase –II, Patancheru and Balanagar, Shadnagar, Mahaboobnagar (Dist) for ParticleBoards and IDA, Phase – IV, Patancheru for resins production.

2. Summary of Significant Accounting Policiesa. Basis of preparation of Financial Statements:

The financial statements have been prepared to comply in all material respects with accountingprinciples generally accepted in India and the applicable Accounting Standards notified underSection 211(3C) [the Companies (Accounting Standards) Rules, 2006 (as amended)] and theprovisions of the Companies Act, 1956 (“the Act”). The financial statements have been preparedunder the historical cost convention on accrual basis.All assets and liabilities have been classified as current or non-current as per the Company’snormal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956.Based on the services rendered and their realization in cash and cash equivalents, the Companyhas ascertained its operating cycle as 12 months for the purpose of current and non-currentclassification of assets and liabilities.

b. Use of estimatesThe preparation of financial statements in conformity with accounting principles generally acceptedin India requires management, where necessary, to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from those estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised.

c. Exceptional and Extraordinary Items(i) Exceptional Items: Items of income and expense within profit or loss from ordinary activities

are of such size, nature or incidence that their disclosure is relevant to explain the performanceof the enterprise for the period, the nature and amount of such items are disclosed separatelyas exceptional items.

(ii) Extraordinary Items: Extraordinary items are income or expenses that arise from eventsor transactions that are clearly distinct from the ordinary activities of the enterprise and,therefore, are not expected to recur frequently or regularly

d. Revenue Recognition:The income from sale of goods is recognised as and when sales are made. Sales are inclusive of allTaxes, Duties and other charges and net of Trade Discounts and Rebates.

e. Fixed Assets:Tangible fixed assets are stated at cost less accumulated depreciation and impairment loss. Cost ofacquisition of fixed assets is inclusive of freight, net of duty/tax credits availed, if any, incidentalexpenses relating thereto and the cost of installation/erection. Financing costs relating to acquisitionof fixed assets which takes substantial period of time to get ready for intended use are also includedto the extent they relate to the period upto such assets are ready for their intended use.

28


f. Depreciation:Depreciation is provided on written down value method for Patancheru Unit and on Straight LineMethod for Shadnagar and Resins units at the rates and in the manner specified in Schedule XIVof the Companies Act, 1956.

g. Impairment of Assets:The Company assesses at each balance sheet date whether there is any indication that an assetmay be impaired. If any such indication exists, the Company estimates the recoverable amount ofthe asset. If such recoverable amount of the asset or the recoverable amount of the cash generationunit to which the asset belongs is less than its carrying amount, the carrying amount is reduced toits recoverable amount. The reduction is treated as an impairment loss and is recognized in theprofit and loss account. If at the balance sheet date there is an indication that if a previouslyassessed impairment loss no longer exists, the recoverable amount is reassessed and the asset isreflected at the recoverable amount subject to a maximum of depreciated historical cost.

h. Inventories:(i) Finished goods are stated at cost or realizable value whichever is less.(ii) Work-in- process is stated at Cost.(iii) Raw materials, Packing Material and Stores and Spares are stated at cost on Weighted Average

method.i. Foreign Exchange Fluctuation:

(i) Initial recognition: Transactions in foreign currencies are initially recorded at the exchangerates prevailing on the date of the transaction.

(ii) Translation: At the year end all monetary assets and liabilities in foreign currency are restatedat the rate prevailing at the year end.

(iii) Exchange Differences: Any gain or loss on translation or settlement of transaction isrecognised in the statement of profit and loss.

(iv) Non-monetary assets and liabilities are translated at the rate prevailing on the date oftransaction.

j. Investments:Investments that are readily realizable and intended to be held for not more than a year areclassified as current investments. All other investments are classified as long-term investments.

Long term Investments are stated at cost. Provision is made for diminution in value of investmentsonly if such decline is other than temporary.

k. Retirement Benefits:(i) Periodical contributions made to concerned authorities towards Provident Fund and ESI are

charged to revenue.(ii) Group Gratuity Scheme is administered through trustees for which policy is taken from LIC

and Premiums will be paid to the said fund. At each reporting date, company’s liabilitytowards gratuity is determined by independent actuarial valuation using the projected unitcredit method and is charged to revenue.

(iii) The workers of the company are eligible for leave encashment. At each reporting date,company’s liability towards leave encashment is determined by independent actuarialvaluation using the projected unit credit method and is charged to revenue.

29


(iv) Company recognizes the undiscounted amount of employee benefits like Leave TravelAssistance, during the accounting period based on eligibility of employee as per Company’srules in this regard.

l. Borrowing Costs:(i) Borrowing costs directly attributable to the acquisition, construction/erection of qualifying

assets, construction/erection of an asset that necessarily takes a substantial period of time toget ready for its intended use or sale are capitalized as part of the cost of the respective asset.

(ii) All other borrowing costs are charged to revenue as and when incurred.m. Earnings per share

(i) Basic earnings per share: Basic earnings per share is calculated by dividing the net profitor loss for the year after tax attributable to equity share holders by weighted average numberof equity shares outstanding during the period.

(ii) Diluted earnings per share: Diluted earnings per share is calculated by dividing the netprofit or loss for the year after tax attributable to equity shareholders by the weighted averagenumber of equity shares outstanding including equity shares which would have been issuedon the conversion of all dilutive potential equity shares unless they are considered anti-dilutive in nature.

n. Taxes on Income(i) Tax expense comprising of current and deferred tax, are considered in the determination of

the net profit or loss for the year.(ii) Current tax: Provision for current tax, estimated to arise on the profit for the year is made

at the current rate of tax in accordance with the Income-tax Act, 1961.(iii) Deferred Tax: In accordance with the Accounting Standard - 22, Accounting for taxes on

income, the company has recognised the deferred tax liability in the accounts. Deferred taxreflects the impact of timing differences between taxable income and accounting income.Deferred tax is measured based on the tax rates and the tax laws enacted or substantivelyenacted at the balance sheet date. Deferred tax asset is recognised only to the extent there isvirtual certainty that sufficient taxable income will be available in future against which suchdeferred tax asset can be realised.

o. Provisions and ContingenciesProvision is recognised when the Company has a present obligation as a result of past event andit is probable that an outflow of resources will be required to settle the obligation, in respect ofwhich a reliable estimate can be made. Provisions are not discounted to their present value andare determined based on best estimate required to settle the obligation at the balance sheet date.These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.Contingent liabilities are disclosed when there is a probable obligation arising from past events,the existence of which will be confirmed only by the occurrence or non occurrence of one or moreuncertain future events not wholly within the control of the company or a present obligation thatarises from past events where it is either not probable that an outflow of resources will be requiredto settle or a reliable estimate of the amount cannot be made, and such liability that may arise istermed as a contingent liability.

p. Insurance Claims:Insurance claims are accounted for on admission by the authorities or on settlement.

q. Unamortized Expenses:Expenditure on account of merger/amalgamation is written off over a period of 5 years.

30


NOTE NO. 3 SHARE CAPITAL

1. Out of the above 88,07,355 Equity shares are held by its holding company, i.e., GVK Projects & TechnicalServices Limited.

2. Redeemable Non-Cumulative preference shares are redeemable by 09 June, 20133. Details of share holders holding more than 5% of total number of shares

As at 30th June, 2011 As at 31st March, 2012

`Number of

sharesoutstanding

`

Authorised:Equity Shares of ` 10/- each. 2,00,00,000 20,00,00,000 2,00,00,000 20,00,00,000

10 % Redeemable Non-CumulativePreference Shares of `10/- each. 3,00,00,000 30,00,00,000 3,00,00,000 30,00,00,000

Issued, subscribed and paid up:Equity Shares of `10/- each fully paid up 1,19,09,953 11,90,99,530 1,19,09,953 11,90,99,530

1,19,09,953 11,90,99,530 1,19,09,953 11,90,99,530Issued, subscribed and paid up:10 % Redeemable Non-CumulativePreference Shares of `10/- each. 2,50,00,000 25,00,00,000 2,50,00,000 25,00,00,000

2,50,00,000 25,00,00,000 2,50,00,000 25,00,00,000

Total 3,69,09,953 36,90,99,530 3,69,09,953 36,90,99,530

Number ofshares

outstanding

Particulars

As at 30th June, 2011 As at 31st March, 2012

%Number ofshares held %

GVK Projects & Technical Services Limited 88,07,355 73.95 -

G.V.Krishna Reddy - 7,46,056 6.26%

G.Indira Krishna Reddy - 7,45,000 6.26%

Zinger Investments Private Limited - 50,85,199 42.70%

Total 88,07,355 65,76,255

Number ofshares held

Name of the Share Holder

Preference Shares Equity Shares

As at 30th

June, 2011 As at 31st

March, 2012As at 30th

June, 2011

Shares outstanding at the beginning of the year 1,19,09,953 1,19,09,953 2,50,00,000 2,50,00,000Add: Fresh Issue during the year - - - -

1,19,09,953 1,19,09,953 2,50,00,000 2,50,00,000Less: Shares bought back during the year - - - -Shares outstanding at the end of the year 1,19,09,953 1,19,09,953 2,50,00,000 2,50,00,000

As at 31st

March, 2012

Particulars

4. Reconciliation of Number of Shares Outstanding:

31


As at31st March, 2012

`

As at30th June, 2011

`

Capital ReservesBalance at the beginning of the year 27,480 27,480Additions - -

27,480 27,480Deductions - -Balance at the end of the year 27,480 27,480

Revaluation ReserveBalance at the beginning of the year 28,73,28,873 28,73,28,873Additions - -

28,73,28,873 28,73,28,873Deductions - -Balance at the end of the year 28,73,28,873 28,73,28,873

General Reserve:Balance at the beginning of the year 5,01,92,187 5,01,92,187Additions - -

5,01,92,187 5,01,92,187Deductions - -Balance at the end of the year 5,01,92,187 5,01,92,187

Central and State Subsidies:Balance at the beginning of the year 15,00,000 15,00,000Additions - -

15,00,000 15,00,000Deductions - -Balance at the end of the year 15,00,000 15,00,000

Surplus in Statement of Profit and LossBalance at the beginning of the year (27,32,93,530) (37,742,113)Add: Profit for the year (6,48,44,262) (23,55,51,417)

(33,81,37,792) (27,32,93,530)Less: Proposed dividend : Tax on Proposed dividend - - : Transfer to Reserves - -Balance at the end of the year (33,81,37,792) (27,32,93,530)

Total of Reserves and Surplus 9,10,748 6,57,55,010

NOTE NO. 4 RESERVES AND SURPLUS

Particulars

32



`


`

Due to staff 861 1,82,766Liabilities for: expenses 1,06,44,181 9,23,37,452 : Other finance 5,38,851 12,60,298Deposits refundable 82,68,750 83,18,750Advances received against sales 82,88,619 45,05,995Unpaid dividends(not due for remittance) 12,68,750 15,51,172Advance received against sale of land 38,46,36,000 23,46,36,000

Total 41,36,46,012 34,27,92,433

NOTE NO. 6 OTHER CURRENT LIABILITIES

Employee retirement benefits *Gratuity - 2,58,43,001Leave Encashment 42,855 16,44,437

Total 42,855 2,74,87,438

* Refer Note No. 28

NOTE NO. 7 SHORT-TERM PROVISIONS

Particulars

Particulars As at

31st March, 2012`


`


`


`

Dues to: Small and Micro Enterprises * - - : Others than Small and Micro Enterprises 3,84,16,844 11,67,24,464

Total 3,84,16,844 11,67,24,464

NOTE NO. 5 TRADE PAYABLES

* Based on the information available with the company, Refer Note No: 25

Particulars

33


NO

TE

NO

. 8

FIX

ED

AS

SE

TS

GR

OS

S B

LOC

KD

EP

RE

CIA

TIO

N

Par

ticul

ars

(a)Ta

ngibl

eLa

nd

359

,666,3

4035

9,666

,340

-35

9,666

,340

359,6

66,34

0

Build

ings

94,2

31,73

7

94,2

31,73

7

-

44

,649,4

32 1

,862,6

28 4

6,512

,060

47

,719,6

77 4

9,582

,305

Plant

and

Machi

nery

8

49,72

6,163

1,536

,907

1,800

,000

849,4

63,07

020

,937,9

3520

,937,9

35 66

0,311

,718

17,04

3,996

1,710

,000

675,6

45,71

4 15

2,879

,421

189

,414,4

45

Furni

ture a

ndFix

tures

24,46

7,480

24,46

7,480

-

21,1

60,45

0

266

,990

21,42

7,440

3,040

,040

3,307

,030

Vehic

les

3

,445,6

89

3

,445,6

89

-

2

,351,4

10

14

9,346

2,50

0,756

944,9

33 1,

094,2

79

Office

equip

ment

1,

591,0

82

1,591

,082

-

1,25

7,627

20,12

4

1,27

7,751

313

,331

333,4

55

Comp

uters

4

12,75

4

412,7

54

-

334

,509

5

0,272

384,7

81

2

7,973

78,24

5

Total

1,33

3,541

,245

1,53

6,907

1,8

00,00

0 1

,333,2

78,15

2

- 2

0,937

,935

-

20,9

37,93

5 7

30,06

5,146

19,3

93,35

6 1

,710,0

00 7

47,74

8,502

564

,591,7

15 6

03,47

6,099

Previo

us Ye

ar

1,346

,102,2

17

142,8

00 1

2,703

,772

1,33

3,541

,245

-

-

-

-

700

,441,8

95 3

5,871

,988

6,24

8,737

73

0,065

,146

603

,476,0

9964

5,660

,322

As at

01.07

.2011

`

Addit

ions

durin

g the

Perio

d `

Dedu

ctions

durin

g the

Perio

d `

As at

31.03

.2011

`

As at

31.03

.2012

`

Up to

30.06

.2011

`

Upto

30.06

.2011

`

durin

g the

perio

d `

revere

seddu

ring t

hepe

riod `

for th

epe

riod `

Onde

ductio

ns

`

As at

31.03

.2012

`

As at

31.03

.2012

`

As at

30.06

.2011

`

NE

T B

LO

CK

IMPA

IRM

EN

T *

* R

efer

Not

e N

o. 2

6

34



`


`

Others - UnquotedInvestments in Government securities 59,600 59,60046,498 Equity Shares of `10/-each fully paid inPatancheru Envirotech Limited 4,77,900 4,77,900

5,37,500 5,37,500Less: provision for diminution in value of investments - -

Total 5,37,500 5,37,500

Aggregate amount of : quoted investments - - : market valueAggregate amount of unquoted investments 5,37,500 5,37,500Aggregate provision for diminution in value of investments - -

NOTE NO. 9 NON-CURRENT INVESTMENTS

(at Cost / Net Realisable Value, as valued and certified bythe management)Raw materials 14,62,12,203 16,61,15,645Work-in-progress - 17,590Finished goods - 4,779Stores and spares 5,74,29,252 5,91,05,440

Total 20,36,41,455 22,52,43,454

NOTE NO. 11 INVENTORY

(a) Secured, Considered GoodPost office Deposit 1,000 1,000

1,000 1,000Less: Allowance for bad and doubtfulTotal (a) 1,000 1,000

(b) Unsecured, Considered GoodDeposits recoverable 81,41,459 95,41,757

81,41,459 95,41,757Less: Allowance for bad and doubtfulTotal (b) 81,41,459 95,41,757Total (a+b) 81,42,459 95,42,757

NOTE NO. 10 OTHER NON-CURRENT ASSETS

Particulars

Particulars

Particulars


`


`


`


`

35



`


`

NOTE NO. 12 TRADE RECEIVABLES

(a) Unsecured, Considered GoodOutstanding for a period exceeding six months 60,78,435 84,95,726Others - 1,50,59,824

60,78,435 2,35,55,550Less: Allowance for bad and doubtful debts

Total (a) 60,78,435 1,77,21,869

(b) Doubtful

Outstanding for a period exceeding six months 38,33,371 58,33,681Others

38,33,371 58,33,681Less: Allowance for bad and doubtful debts 38,33,371 58,33,681

Total (b) - -

Total (a+b) 60,78,435 1,77,21,869

NOTE NO. 13 CASH AND CASH EQUIVALENTS

Cash EquivalentsBalances with banksa. Earmarked balances with banks ( for unpaid dividend) 12,68,750 15,51,172b. Balances with banks to the extent held as margin money or

security against borrowings, guarantees and other commitments 22,19,848c. in current accounts 76,53,595 1,10,66,469d. In fixed deposits 1,10,000 7,49,491

Total 90,32,345 1,55,86,980

Particulars

Particulars As at

31st March, 2012`


`

36



`


`

NOTE NO. 14 SHORT-TERM LOANS AND ADVANCES

(a) Secured, Considered GoodStaff advances 1,87,739 3,24,792

1,87,739 3,24,792Less: Allowance for bad and doubtful loans and advancesTotal (a) 1,87,739 3,24,792

(b) Unsecured, Considered GoodAdvance tax and Tax deducted at Source(net of Provisions) 2,26,03,296 2,29,06,479Balances with Government Authorities 1,74,764 13,70,639Advances to suplliers 47,57,569 65,01,680

2,75,35,629 3,07,78,798Less: Allowance for bad and doubtful loans and advancesTotal (b) 2,75,35,629 3,07,78,798Total (a+b) 2,77,23,368 3,11,03,590

NOTE NO. 15 OTHER CURRENT ASSETS

Prepaid expenses 4,69,466 11,36,498Interest accrued 4,05,769 1,52,889Cenvat and Vat receivable 11,71,227 16,79,237Incentives receivable - 1,49,81,607Unamortised expenses(Merger expenses) - 3,74,145

Total 20,46,462 1,83,24,376

Particulars

Particulars As at

31st March, 2012`


`

Current Period`

Previous Period`

NOTE NO. 16 REVENUE FROM OPERATIONS

Sale of products 9,91,914 55,29,13,889

Total 9,91,914 55,29,13,889

Particulars

37


Current Period`

Previous Period`

NOTE NO. 17 OTHER INCOME

Interest Income 4,78,690 12,94,921Excess provisions and credit balances written back 75,03,061 81,05,250Profit on sale of assets 6,40,000 1,05,35,096Profit on sale of Raw Material - 65,80,769Foreign exchange(net) - 16,60,636Miscellaneous Income 5,57,926 22,79,700

Total 91,79,677 3,04,56,372

Current Period`

Previous Period`

NOTE NO. 18 EMPLOYEE BENEFITS EXPENSE

Salaries and Wages 23,37,988 9,88,43,771Contribution to provident and other funds 1,43,665 61,85,132Gratuity 13,462 2,27,12,869Staff welfare expenses 1,83,831 38,32,635

Total 26,78,946 13,15,74,407

Current Period`

Previous Period`

NOTE NO. 19 FINANCE COSTS

Interest expense 6,36,658 4,61,88,910Bank charges 1,16,555 43,75,060

Total 7,53,213 5,05,63,970

Particulars

Particulars

Particulars

38


Current Period`

Previous Period`

NOTE NO. 20 OTHER EXPENSES

Consumption of stores and spare parts - 2,07,23,383Power and fuel 27,92,238 6,44,67,126Rent 15,925 18,46,190Repairs to : buildings 1,19,920 11,75,813

: machinery 6,900 36,06,216: Others 32,118 6,60,890

Insurance 9,10,325 24,88,221Freight and handling charges 30,785 3,26,10,387Printing and Stationery 1,63,367 5,28,696Communication costs 2,27,532 17,23,549Rates and taxes 4,52,999 2,50,06,340Advertisement and Sales Promotion 26,842 2,14,455Donations - - 31,500Directors remuneration 12,63,818 23,73,336Directors sitting fee 52,000 1,00,000Payments to Auditor as : Statutory auditor 3,00,000 3,00,000

: Tax maters 15,000 -: for Certification 5,000 -

Detention charges - 39,33,221Security charges 3,79,537 33,63,090Travelling and Conveyance 5,02,492 80,37,552Legal and Professional Charges 12,11,480 56,69,359Miscellaneous expenses 3,22,293 30,40,253Provision for bad and doubtful debts 8,70,920 20,47,267Foreign exchange loss(net) 10,95,737 -Loss on sale of : assets - 778

Investments - 10,39,500Raw Materials 34,858 63,90,253

Impairment loss on fixed assets 2,09,37,935 -Raw Materials written off 6,83,232 1,00,49,299Unamortised expenses written off 3,74,145 4,92,305Claims written off 1,49,81,607 1,14,668Debit balances written off 31,65,879 3,59,415Prior period items 7,70,588 -

Total 5,17,45,472 20,23,93,062

Particulars

39


21. Earnings per equity share:

Current Period Previous PeriodBasic Earnings per equity share

Profit / (Loss) (after tax) for the year ` (6,48,44,262) (23,55,51,419)Weighted average number of equity shares of` 10/- each fully paid up 1,19,09,953 1,19,09,953Basic Earnings per equity share ` (5.44) (19.78)

Since, the Company does not have any dilutive securities, the basic and diluted earnings per share arethe same.

22. Capital Commitment:

Estimated amount of contracts remaining to be executed on capital account and not provided for ̀ Nil(2011: ` Nil).

23. Contingent Liabilities not provided for:

As at 31st

March, 2012`

I Towards Bank GuaranteeII On Account of Letter of CreditIII Claims against the Company not acknowledged as Debts

i) Royalty and Interest to Forest Department:Therehas been a claim by Forest Department, Governmentof Andhra Pradesh for ̀ 50.83 lacs towards Royalty onaccount of wood supplied from 1980 to 1984 and for` 13.02 lacs towards interest thereon out of which theCompany had accepted the claim to the extent of` 30.65 lacs towards Royalty, which is provided.

ii) Demands of the Income-tax department, contested bythe company

iii) Central Excise Department : The Excise Departmentfiled an appeal before Hon’ble CESTAT, Bangaloreagainst refund of Excise Duty of ̀ 36.26 lacs on accountof abatement of Octroi claimed by the company whichwas decided in Company’s favour. Consequently,Department filed further appeal in this regard beforethe Hon’ble High Court of Andhra Pradesh.

iv. Commissioner of Customs & Central Excise:Commissioner of Customs and Central Excise passedan order demanding penalty of ` 87.32 lacs towardsremoval of Base paper from the Bonded warehousewithout payment of duty. Company has filed an appealwith CESTAT, Bangalore, for waiver of the sameexplaining that the removal is due to the repairs to thebonded warehouse.

1,04,085---

33,19,244

2,86,73,707

36,26,892

87,31,977

10,33,9103,99,86,311

33,19,244

2,86,73,707

36,26,892

-

ParticularsSl.No.

As at 30th

June, 2011`

40


IV) Even though the Company has installed an ETP Plant and not releasing any hazardous pollutantsoutside factory, a public interest litigation petition was filed before Supreme Court against variousindustries including our company in Patancheru area. Company has also obtained a certificate fromAP Pollution Control Board certifying that the pollution caused by our company is within the tolerablelimits of pollution control norms. Therefore the management is not envisaging any liability in thisregard.

24. Additional information pursuant to the provisions of Clauses 5 of the Part II of Schedule VI to theCompanies Act, 1956:

a. Details of raw materials (including packing material) consumed under broad heads;

b. The value of consumption of imported and indigenously obtained raw materials, stores and spareparts and the percentage of each to the total consumption:

Wood MTs — — 36,599 6,87,20,227Chemicals MTs — — 23,899 6,30,92,551Base Paper MTs — — 302 5,87,78,802PPB Boards Sq Mtrs — — 4,51,767 6,86,47,967Others — — 52,44,868

TOTAL — — 26,44,84,415

`Quantity`Quantity

Current Period Previous PeriodParticulars UOM

Raw Materials Indigenous — — 17,06,57,930 60.21Imported — — 11,28,01,745 39.79TOTAL — — 28,34,59,675 100.00 spare parts and components consumed Indigenous —- —- 1,47,00,216 70.94Imported — — 60,23,167 29.06 TOTAL — — 2,07,23,383 100.00

%`%`

Current Period Previous PeriodParticulars

c. Value of Imports on CIF basis:

Current Period`

Previous Period`

Raw Material — 16,61,91,218Components and spare parts — 54,89,109

TOTAL — 17,16,80,327

Particulars

41


d. Payments / Expenditure in Foreign Currency on account of:

(Cash Basis)

Current Year`

Previous Year`

Raw Material 4,07,06,931 18,72,45,196Components and spare parts — 54,89,109Technical Fees — 3,10,250

TOTAL 4,07,06,931 19,30,44,555

Particulars

e. Earnings in Foreign currency ` Nil (30 June, 2011 ` Nil)

25. Disclosure under “Micro, Small and Medium Enterprises Development Act, 2006”:

As per the information available with the company, there are no dues to micro and small enterprises ason March 31, 2012.

26. Impairment of fixed assets:

During the year the company has stopped its manufacturing activity in all 3 plants. The company hasinvited tenders to dispose off its plant and machinery. Based on the tenders received the company hasrecognised impairment loss ` 20,937,935/-

27. During the period the company stopped manufacturing activity and is in the process of disposing offplant and machinery. In view of stopping the manufacturing activity, declaring voluntary retirement toits employees and inviting tenders for disposal of plant and machinery, the company’s status is consideredas not a going concern.

28. Employee Benefits:

During the previous period ended 30th June,2011 the company declared a “Voluntary RetirementScheme” and most of the employees have opted for voluntary retirement. Hence Gratuity Liability asper the Payment of Gratuity Act and Leave encashment as per the company’s policy up to 31 March,2012 (30 June, 2011) are fully provided/ paid. Therefore particulars required under AS – 15 are notfurnished for this period.

29. Segment Reporting:Novopan Industries Limited (“the company”) is engaged in the business ofproduction and sale of Plain & Melamine Faced Particle Boards. Management is of the opinion thatproduction and sale of Plain & Melamine Faced Particle Boards is a single business segment and theCompany operates in a single geography i.e. India. Accordingly, disclosure of segment information asprescribed in the Accounting Standard 17 “Segment Reporting” is not applicable.

30. Related Party Disclosure:

Disclosures as required by the accounting standard – 18 of the Institute of Chartered Accountants ofIndia are given below:

42


Companies/Firms/Trust in which key management and their relatives are interested:

Accura Constructions (P) LtdAccura Estates (P) LtdAlakananda Hydro Power Company LtdAllied Estates (P) LtdAltitude Design & Development (P) LtdAmtran Constructions (P) LtdAnchor Estates (P) LtdAppease Estates Private LtdBengaluru Airport & Infrastructure Developers (P) LtdBengaluru International Airport LtdBlue Streak Consultants (P) LtdBlue Streak Land Holdings (P) LtdBonanza Real Estates (P) LtdCaspian Capital & Finance Private LtdCasuarina Capital & Finance (P) LtdClassic Land Holdings (P) LtdConsolidated Real Estates (P) LtdCygnus Real Estates (P) LtdDelta Land Holdings (P) LtdDhaulasidh Power (P) LtdEagle Land Holdings (P) LtdFair Value Land Holdings (P) LtdFortune Real Estates (P) LtdFresenius Intraven (P) LtdGenesis Realtors (P) LtdGIKR Land Holdings (P) LtdGold Green Land Holdings (P) LtdGoriganga Hydro Power (P) LtdGreen Woods Golf & Resorts (P) LtdGreenridge Hotels &Resorts(P)LtdGSR Land Holdings (P)LtdGVK Airport Developers (P) LtdGVK Airport Holdings (P) LtdGVK Avaiation (P) LtdGVK Biosciences (P) LtdGVK Cements (P) LtdGVK City (P) Ltd

GVK Coal (Tokisud) Co.(P) LtdGVK Davix Research (P) LtdGVK Davix Technologies (P) LtdGVK Developmental Projects (P) LtdGVK Energy Holdings (P) LtdGVK Energy LtdGVK EnterprisesGVK Estates Private LimitedGVK FoundationGVK Gautami Power Ltd #GVK Hydel (P) LtdGVK Industries LtdGVK Jaipur Expressway (P) Ltd #GVK Oil & Gas LtdGVK Perambalur SEZ (P) LtdGVK Power & Infrastructure Ltd.GVK Power (Goindwal Sahib) LtdGVK Power (Ratlam) P.LtdGVK Projects & Technical services Ltd #GVK Properties & Management.Co., (P) LtdGVK Technical & Consultancy Services (P) LimitedGVK Transportation P LtdGVK Virudhnagar SEZ (P) LtdIKR Land Holdings (P) LtdInc GVK bio (P)LtdIndigo EnterprisesIndigo EstatesIndira ConstructionsIndira EnterprisesInnovative Land Holdings (P) LtdInogent Laboratories (P) LtdISR InfrastructureJK Operation & Maintainance (P) LtdKR Bhupal Land Holdings (P)LtdKRAMB Land Holdings (P) LtdKRBSB Estates (P)LtdKRGV Land Holdings (P)Ltd

43


Krishna enterprisesLakshmi EnterprisesLepus Land Holdings (P) LtdMallikarjuna Estates (P) LtdMallikarjuna Finance (P) LtdMarine DevelopersMarine EnterprisesMarine EstatesMarriot Land Holdings (P) LtdMarwell Architects & Contractors (P) LtdMetro Architects & Contractors (P) LtdMidas Estates (P) LtdMMR ConstructionsMR ConstructionsMRK ConstructionsMumbai Airport Developers (P) LtdMumbai Aviation Fuel Farm Facility (P) LtdMumbai International Airport (P) LtdOrbit Travel & Tours (P) LtdOxford Land Holdings (P) LtdPace Constructions (P) LtdPace Estates (P) LtdPaigah House Hotel (P) LtdParthasarathy Airconditioned Tourists (P) LtdPatikari Power (P) LtdPinakini Share & Stock Brokers LtdPinnacle Land Holdings (P) LtdPlateau Constructions & Engg. (P) LtdPlateau Land Holdings.(P) LtdRaghavendra Finance (P) LtdRaghavendra Land Holdings (P) Ltd

Regulus Estates (P) LtdRK EstatesS.Bhupal & OthersSBSR Land Holdings (P)LtdSheraton Estates (P) LtdSHSB Land Holdings (P)LtdSiregarha Mines LtdSOMKRB Land Holdings (P)LtdSR Finance & OthersSR Finance (P) LtdSri Hari DevelopersSri Hari EnterprisesSri Hari EstatesSri Lakshmi EnterprisesSri Parvathi EnterprisesSri Shiva EnterprisesSri Venkateswara EnterprisesSri Vishnu EnterprisesStarlet Land Holdings (P) LtdSunshine Properties (P)LtdSuphala Real Estates (P) LtdTaj GVK Hotels & Resorts Ltd #TRG ConstructionsTrinity Advisors (P) LtdUbiquitous Infra tech Private LimitedVerduraVertex Infratech (P) LtdVertex Projects LtdVolantis Land Holdings (P) LtdVulcon Constructions (P) LtdZinger Investments (P) Ltd

# Companies with which there are transactions during the year.

Directors:(i) Mr G V Krishna Reddy(ii) Mrs G Indira Krishna Reddy

Key Management Personnel:Mr S.P. Bhasin Director (Operations)(w.e.f. 01-11-2010 to 15-07-2011)Mr. S A Naqui, Executive Director (w.e.f. 02-08-2011)

44


Details of transactions for the year ended 31st March, 2012 and amounts outstanding as on 31st March, 2012are as follows:

Name of the related party Nature of relationshipNature of

transaction `

Sri S. P. Bhasin Key Management Personnel Remuneration 1,55,767(24,88,536)

Mr.S.A.Naqui Key Management Personnel Remuneration 11,15,484(—)

Sri. G. V. Sanjay Reddy Relative of Directors Rent —(6,71,175)

Alakananda Hydro Power Enterprises in which Directors Sales —-Company Limited / their relatives are interested (1,145)

GVK Gautami Power Limited Enterprises in which Directors Sales —-/ their relatives are interested 24,582)

GVK Industries Limited Enterprises in which Directors Sales —-/ their relatives are interested (84,355)

Taj GVK Hotels & Resorts Limited Enterprises in which Directors Sales —-/ their relatives are interested (65,494)

Hospitality 54,433Charges (1,00,318)

Payable —-(86,203)

GVK Power & Infrastructure Limited Enterprises in which Directors Sales —/ their relatives are interested (4,580)

GVK Jaipur Expressway Limited Enterprises in which Directors Deposits 80,88,750/ their relatives are interested Refundable (80,88,750)

GVK Projects & Technical Enterprises in which Directors Advance received 15,00,00,000Services Limited / their relatives are interested on sale of land (23,46,36,000)

Payable 38,46,36,000(23,46,36,000)

45


31. Deferred Tax:

Deferred tax asset, arising on account of carry forward losses is not recognised due to lack of virtualcertainty of reversal.

32. Due to market recession, shortage of raw material and irregular power supply, the management decidedto stop the production in all the 3 plants w.e.f. 7th January, 2011 and declared voluntary retirementscheme to its employees. Hence provision was made for such liability in the accounts and shown underthe head “Voluntary Retirement Compensation” as an extraordinary item.

33. In the opinion of the Board of Directors of the company, the current assets, loans and advances areexpected to realize in the ordinary course of business approximately the value at which they are statedin accounts.

34. The balances in personal accounts are subject to confirmations and reconciliations.

35. These financial statements have been prepared under Revised Schedule VI to the Companies Act,1956. Figures of the previous period have been regrouped / rearranged to conform to those of thecurrent period.

36. Current period being 9 months and previous period being 15 months. Hence figures are not comparable.

As per our report of even date For and on behalf of the Board of Directors

for BRAHMAYYA & CO.Chartered AccountantsFirm Regn No. : 000513S


Place : HyderabadDate : 30th May, 2012




46


NOTES

Novopan Industries LimitedRegd. Office: IDA, Phase - II, Patancheru, Medak District (AP) - 502 319.

ATTENDANCE SLIP

I hereby record my presence at the 27th Annual General Meeting of the Company held on Monday,the 10th December, 2012 at 11.30 a.m. at Sri Sathya Sai Nigamagamam, 8-3-987/2, Srinagar Colony,Hyderabad - 500 073.

Name of the Shareholder/Proxy* No. of Shares Held

SIGNATURE OF THESHAREHOLDER/PROXY

*Strike out whichever is not applicable

Note : Please handover the slip at the entrance of the meeting Venue.

Notes : 1. Shareholder/Proxyholder wishing to attend the meeting must bring the Attendance Slip to the Meetingand handover at the entrance duly signed.

2. Shareholder/Proxyholder desiring to attend the meeting should bring his/her copy of the Annual Reportfor reference at the meeting.

Novopan Industries LimitedRegd. Office: IDA, Phase - II, Patancheru, Medak District (AP) - 502 319.

PROXY

Folio No. : Client ID No. : DP ID No. :

Folio No. : Client ID No. : DP ID No. :

I/Weof in the District ofbeaing a Member/Members of the above named Company, hereby appoint

of in thedistrict of or failing him / her or

in the district of as my/ourProxy to attend and vote for me/us on my/our behalf at the 27th Annual General Meeting of the Company to beheld on Monday, the 10th December, 2012 at 11.30 a.m. at Sri Sathya Sai Nigamagamam, 8-3-987/2, SrinagarColony, Hyderabad - 500 073 and any adjournment thereof.

Signed this day of 2012.

No of Shares : Signature

Note : The Proxy Form must be returned so as to reach the Registered Office of theCompany at IDA, Phase - II, Patancheru, Medak District (AP) - 502 319 notless than 48 (forty-eight) hours before the time for holding the aforesaid meeting.

AffixRevenueStamp

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Documents

Novopan Industries Limited · 2012-12-13 · 4th Floor, Golden Green Apartment Erramanzil Colony, Somajiguda Hyderabad – 500 082 Bankers - Indian Overseas Bank Indian Bank IDBI